ASIC warned for years of CHESS replacement concerns

The Australian Securities and Investments Commission (ASIC) was urged to intervene in the Australian Securities Exchange (ASX) CHESS replacement project nearly two years’ before it foundered, according to information provided to a Parliamentary Committee.

The Stockbrokers and Investment Advisers Association (SIAA) has told the Parliamentary Joint Committee on Corporations and Financial Services that it raised its concerns with ASIC in March, 2020.

Providing answers to questions on notice from the committee, the SIAA said it had been a member of the CHESS Replacement Project Stakeholder group which had raised concerns about the project with both the ASX and ASIC “over some years”.

“In March 2020 SIAA wrote to ASIC about the serious concerns it had with the project being delivered as per timetable in a manner that preserves an orderly market. SIAA pointed out that stakeholders still lacked clarity and certainty regarding project-critical technical and procedural aspects of the project and that we would not have a comprehensive view of the regulatory changes and their impact until at least mid-2020. SIAA emphasised that such uncertainty created substantial risk at this stage in the project, with stakeholders unable still to properly understand the full technical, legal and operational impact and requirements,” the SIAA told the committee.

“We called on ASIC take a more active role in overseeing the project. We considered that ASIC was in a position to ensure effective coordination and communication of the technical, procedural and regulatory strands of the project, utilising powers to ensure that markets were working efficiently. We highlighted that a review of the timetable set by ASX was urgently required, given the risk of market disruption and the lack of a roll-back plan,” it said.

“We are unable to state what actions ASIC undertook in response to our approaches on this issue,” the SIAA said in its answers.

ASIC announced late last month that it was investigating whether the ASX, its directors and officers had breached their legal obligations during the CHESS replacement project.